Borrowing has not helped Nigeria in terms of growth – Ekpo

Borrowing is not helping Nigeria in terms of growth and development, Professor Akpan Ekpo, Director General, West African Institute of Financial and Economic Management (WAIFEM) has said.

Speaking at Finance Correspondents Association of Nigeria (FICAN) Roundtable on the Economy held in Lagos, he said, “the borrowing the country has made has not even reduced poverty because they were not channeled to productive activities.”

Continuing, he said, “Nigeria has potentials for growth. If things are right in this country, foreign investors will come. There is no need for government to lavish money unnecessarily by taking government officials to abroad to spend huge money for accommodation, feeding and other allowances just to woo investors. Nigeria is a sleeping giant and there are potentials.”

Prof. Ekpo, however, called on the government to urgently address security problem, saying, “Foreign investors cannot come to Nigeria when the security of their lives is not guaranteed. “ Another issue bedeviling the country is governance. The issue of governance and leadership should be looked into. Our value system is not helping us where people worship corrupt leaders.”

Corroborating, the Managing Director, Financial Derivative Company Limited, Mr. Bismark Rewane, said, ‘There is nothing wrong in borrowing but where the money is deployed matters a lot. If we borrow for productive purpose no problem as it will have positive effect in terms of growth of the economy.”

In his expectation for the economy 2013, Rewane said, “There is high potential of recovery in major sectors after 2012’s slow output. There will be improved power output; inflation would decline to about 9.5per cent, Food prices to trend downwards and declining interest rate. Furthermore, the Nigeria’s nominal GDP is estimated to reach $300 billion in 2013.

Furthermore, while commenting on the economy, Rewane, said, “Gross Domestic Product (GDP) rebasing is expected to take place this year and as such would alter the base year to 2008 from 1990. He said that by carrying out the exercise, Nigeria will be emulating Malaysia and South Africa which rebased their GDPs from 2000 to 2005 each and Ghana- from 1993 to 2006.

He said rebasing the GDP would make the rich richer, and poor poorer while the country’s growth trajectory will decline.

The GDP is the market value of all final goods and services produced within a country, calculated using product, income and expenditure approaches. According to Rewane, real GDP is one that is adjusted for inflation while nominal GDP is the value of goods and services based on current market prices.

He further explained that Gross National Product (GNP) measures the value of goods and services produced by a country’s citizens regardless of their location while Gross National Income (GNI) is GDP plus income receipts minus income payments from the rest of the world.

He said that Nigeria’s real GDP growth could decline from seven per cent to five per cent in 2013 adding that fiscal deficit as a percentage of GDP is usually at a threshold of three per cent. Applying this principle, maximum deficit for 2013 would have been N1.3 trillion while the rebasing will allow for a deficit of N900 billion or 1.5 per cent.